Tesla Stock Is Going Nowhere Fast Despite Elon Musk’s SEC Settlement

Lynette Rhodes

Shares of Tesla jumped 18% on Monday as signs it had met targets for quarterly production numbers added to relief at Chief Executive Elon Musk's settling a lawsuit with regulators that could have forced him out.

The SEC sued Musk on Thursday for misleading investors after falsely tweeting that he had secured funding to take the company private - also known in the securities biz as fraud.

Analysts from Cowen wrote in a note over the weekend that while the settlement would likely lead to a near-term bump for Tesla shares, it could leave Musk open to future litigation - including class-action lawsuits that have already been filed.

The company has recently been struggling to meet audacious production goals for its Model 3 sedan.

But the claim on August 7 that he had the funding to take Tesla private, and a subsequent U-turn, stunned Wall Street and came amid public appearances which saw Musk smoke marijuana live on air and call a British diver in the Thai cave rescue a "pedo".

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From the beginning of this case, the SEC requested as a penalty that Elon Musk had left the position of chairman from the board of Tesla, something that has now been achieved.

Nelson told FOX Business the settlement, which is still subject to court approval, "reflects certainty Musk is going to remain with the company in the CEO role".

Tesla did not immediately respond to requests for comment.

Musk and Tesla must each pay $20 million in fines, which will be distributed to traders who were harmed by the tweets.

Lawyers say the settlement and size of the fine may give more ammunition to short-sellers pursuing separate cases against Mr Musk for manipulating the company's shares as well as to a probe by the Justice Department. Secondly, the company's board will also appoint two new independent directors, with a new committee dedicated but not limited to regulating Musk's communications as he remains CEO. Tesla has never reported a net profit and has been burning through cash since it was created in 2003.

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